Private jobseekers often keep discussing about gratuity. However, despite this, many employed people do not have proper information about gratuity.
New Delhi: If you are a salaried employee, then you must have also heard the mention about gratuity at one time or another. Especially those in private jobs often keep discussing about gratuity. However, despite this, many employed people do not have proper information about gratuity. Today we will try to know in detail about gratuity and its related rules.
What is gratuity
Apart from salary, pension and PF, employees working for a long time in the same company also get the benefit of gratuity. Gratuity is like a gift from the company to an employee. A small part of the gratuity is deducted from the salary of the employees. Along with this, a large amount is also deposited by the company as gratuity. If you work in a company for 5 years, then you will be entitled to gratuity there. Also, if you fulfill certain conditions of the job, then you will get guaranteed gratuity.
Payment of Gratuity Act, 1972
Under the Payment of Gratuity Act, 1972, the benefit of gratuity is available to every employee of a company where more than 10 employees work. If an employee leaves the job or changes or retires after spending a specified time, then he gets the benefit of gratuity. Apart from this, the benefit of tax is also available on this. The government has increased the limit of tax free gratuity from 10 lakhs to 20 lakhs. Along with this, after the implementation of the new wage code, the amount of gratuity will also increase.
How is Gratuity Calculated?
Gratuity is drawn according to a fixed formula. Its formula is- Total Gratuity Amount = (Last Salary)x (15/26)x (How many years worked in the company).
If it is assumed that an employee worked in the same company for 20 years and his last salary is 75 thousand rupees. So gratuity will be counted on the basis of 26 days according to the four days holiday of the month. Thus the total gratuity amount is 75000x(15/26)x(20)= Rs.865385.
